MNI China Press Digest, June 20: Debt, Liquidity, China-U.S.

     BEIJING (MNI) - The following lists highlights from China press reports on

Thursday:

     China may consider expanding 2019 local government special bond issuance

from the original CNY2.15 trillion, the Shanghai Securities News said today,

citing Zhang Yiqun, a researcher at the Society of Public Finance. Zhang said

there is room for an additional CNY1 trillion, given that total government debt

is not high, and the debt risk is generally controllable. Any quota expansion

would aim to further boost infrastructure investment, as investment growth,

expected to be a key economic driver, has been underperforming, the paper said.

     Stable liquidity conditions are expected at the beginning of Q3, given the

PBOC has maintained net injections of cross-quarter funds via open market

operations, China Securities Journal said today. The newspaper noted that small

and medium-sized non-bank financial institutions are undergoing liquidity

pressure despite ample total liquidity, as financial institutions are alert to

interbank credit risks, blocking the flow of liquidity, the newspaper noted.

     China must stand its ground and resist U.S. pressure as the trade war is

highly likely to continue, with plenty of twists and turns in the China-U.S.

talks, the Global Times said in a commentary late Wednesday. The paper noted

that the yuan exchange rate has not devalued below the key psychological seven

level against the U.S. dollar as some had expected, proving China has enough

stamina for a strategic game with the U.S.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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